Conventional financial wisdom used to champion homeownership as one of the paths to wealth. Owning a piece of the American Dream was considered to be a solid and safe investment in your financial future. It was also a way of diversifying your financial portfolio, acting as a hedge against stock holdings. In previous economic downturns, that belief held true -- during stock market dips over the past two decades the housing market mostly continued to rise.
But the housing market crash that led the latest recession turned conventional wisdom around, and left many wondering if real estate was a good investment after all. The stock market has recovered from its lowest level in March 2009 much more quickly, but the latest quarterly results from the National Association of Realtors survey reveal a housing market that is still stagnant -- and dropping in many areas. And foreclosures are by no means limited to the average person. The rich and famous have proven just as susceptible, and that increased publicity doesn't help those who are hesitant to buy.
But there's more to it. We may be witnessing a shift in perception when it comes to the new age of homeownership. As an article in the Los Angeles Times points out, fewer working-age people see a home purchase as a safe investment, according to surveys by Fannie Mae and Harris Interactive. Real estate advocates see this as a temporary trend, but some psychologists point out that a new generation of buyers is skittish about putting down roots when their careers often demand frequent relocation. Renting, rather than buying, affords them the freedom to pick up and go.
Home prices and interest rates are already low. When credit loosens up and more potential homeowners can borrow the money for a mortgage, we'll see if this is a lasting trend.
Do you think the buyers will begin investing in homeownership as the economy improves?
Keep up with your wealth and follow me on Twitter.
Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.